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Shares of UMB Financial (UMBF - Free Report) declined 3.7% following the release of its first-quarter 2023 results. Operating earnings per share of $1.91 is in line with the Zacks Consensus Estimate. The bottom line also declined 12% with the prior-year quarter’s earnings of $2.17.
Results were aided by higher revenues, expansion of net interest margin (NIM) and increasing loan balances. However, a rise in expenses and higher provisions adversely impacted the company's growth.
UMBF reported GAAP net income of $92.4 million or $1.90 per share in the first quarter, down from $106 million or $2.17 per share recorded a year ago.
Revenues & Costs Rise, Average Loans and Deposits Grow
Total revenues were $378.45 million, up 11.2% year over year. The top line beat the Zacks Consensus Estimate of $370.2 million.
Net interest income (NII) on an FTE basis was $248.2 million, reflecting an increase of 14.5%. Growth in average loans and higher interest rates mainly led to this upside. On an FTE basis, NIM expanded to 2.76% from the prior-year quarter’s 2.35%.
Non-interest income was $130.2 million, up 5.3%. The rise was driven by an increase in trust and securities processing and brokerage fees. These were partially offset by lower service charges on deposit accounts, and higher investment and securities losses.
Non-interest expenses were $237 million, up 10.4%. Increased salaries and employee benefits expenses, processing fees, supplies and services expenses, bankcard expenses, amortization of other intangible assets, and regulatory expenses primarily resulted in this upside.
The efficiency ratio decreased to 63.12% from the prior-year quarter’s 63.98%. A decline in the efficiency ratio indicates an increase in profitability.
As of Mar 31, 2023, average loans and leases were $21.3 billion, up 4.8% from the sequential quarter’s level. The average deposits grew marginally to $31.6 billion as of Mar 31, 2023.
Credit Quality: Mixed Bag
The ratio of net charge-offs to average loans was 0.09% in the reported quarter, down 11 basis points from the year-ago quarter. Moreover, total non-accrual and restructured loans were $15.5 million, plunging 86%.
The provision for credit losses was $23.3 million against the benefit of $6.5 million in the prior-year quarter.
Capital & Profitability Ratios Decline
As of Mar 31, 2023, the Tier 1 risk-based capital ratio was 10.57% compared with 11.81% as of Mar 31, 2022. The total risk-based capital ratio was 12.49% compared with 13.55% in the year-ago quarter. Nonetheless, the Tier 1 leverage ratio was 8.35% compared with 7.53% as of Mar 31, 2022.
Return on average assets at the quarter’s end was 0.97% compared with the year-ago quarter’s 1.10%. Additionally, operating return on average equity was 13.82% compared with 14.67% witnessed in the prior-year quarter.
Our Take
UMB Financial put up a decent performance in the first quarter. The company’s efforts to diversify its non-interest income sources to reduce exposure to interest rates are likely to support revenues in the quarters ahead. However, mounting expenses and rising provisions on worsening economic outlook are major near-term concerns.
UMB Financial Corporation Price, Consensus and EPS Surprise
Bank of Hawaii Corporation (BOH - Free Report) reported first-quarter 2023 earnings per share of $1.14, missing the Zacks Consensus Estimate of $1.23. The bottom line declined 13.6% from the year-ago quarter’s number.
BOH's results benefited from higher revenue growth and decent loan demand. However, a rise in expenses and provisions was a significant drag.
First Horizon National Corporation’s (FHN - Free Report) first-quarter 2023 earnings per share (excluding notable items) of 46 cents were in line with the Zacks Consensus Estimate. The figure improved 21% year over year.
FHN's results benefited from higher NII, a fall in expenses and an improving loan balance. However, a decline in deposits, higher provisions and lower non-interest income were the undermining factors.
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UMB Financial (UMBF) Q1 Earnings Meet, Revenues Rise Y/Y
Shares of UMB Financial (UMBF - Free Report) declined 3.7% following the release of its first-quarter 2023 results. Operating earnings per share of $1.91 is in line with the Zacks Consensus Estimate. The bottom line also declined 12% with the prior-year quarter’s earnings of $2.17.
Results were aided by higher revenues, expansion of net interest margin (NIM) and increasing loan balances. However, a rise in expenses and higher provisions adversely impacted the company's growth.
UMBF reported GAAP net income of $92.4 million or $1.90 per share in the first quarter, down from $106 million or $2.17 per share recorded a year ago.
Revenues & Costs Rise, Average Loans and Deposits Grow
Total revenues were $378.45 million, up 11.2% year over year. The top line beat the Zacks Consensus Estimate of $370.2 million.
Net interest income (NII) on an FTE basis was $248.2 million, reflecting an increase of 14.5%. Growth in average loans and higher interest rates mainly led to this upside. On an FTE basis, NIM expanded to 2.76% from the prior-year quarter’s 2.35%.
Non-interest income was $130.2 million, up 5.3%. The rise was driven by an increase in trust and securities processing and brokerage fees. These were partially offset by lower service charges on deposit accounts, and higher investment and securities losses.
Non-interest expenses were $237 million, up 10.4%. Increased salaries and employee benefits expenses, processing fees, supplies and services expenses, bankcard expenses, amortization of other intangible assets, and regulatory expenses primarily resulted in this upside.
The efficiency ratio decreased to 63.12% from the prior-year quarter’s 63.98%. A decline in the efficiency ratio indicates an increase in profitability.
As of Mar 31, 2023, average loans and leases were $21.3 billion, up 4.8% from the sequential quarter’s level. The average deposits grew marginally to $31.6 billion as of Mar 31, 2023.
Credit Quality: Mixed Bag
The ratio of net charge-offs to average loans was 0.09% in the reported quarter, down 11 basis points from the year-ago quarter. Moreover, total non-accrual and restructured loans were $15.5 million, plunging 86%.
The provision for credit losses was $23.3 million against the benefit of $6.5 million in the prior-year quarter.
Capital & Profitability Ratios Decline
As of Mar 31, 2023, the Tier 1 risk-based capital ratio was 10.57% compared with 11.81% as of Mar 31, 2022. The total risk-based capital ratio was 12.49% compared with 13.55% in the year-ago quarter. Nonetheless, the Tier 1 leverage ratio was 8.35% compared with 7.53% as of Mar 31, 2022.
Return on average assets at the quarter’s end was 0.97% compared with the year-ago quarter’s 1.10%. Additionally, operating return on average equity was 13.82% compared with 14.67% witnessed in the prior-year quarter.
Our Take
UMB Financial put up a decent performance in the first quarter. The company’s efforts to diversify its non-interest income sources to reduce exposure to interest rates are likely to support revenues in the quarters ahead. However, mounting expenses and rising provisions on worsening economic outlook are major near-term concerns.
UMB Financial Corporation Price, Consensus and EPS Surprise
UMB Financial Corporation price-consensus-eps-surprise-chart | UMB Financial Corporation Quote
UMB Financial currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Bank of Hawaii Corporation (BOH - Free Report) reported first-quarter 2023 earnings per share of $1.14, missing the Zacks Consensus Estimate of $1.23. The bottom line declined 13.6% from the year-ago quarter’s number.
BOH's results benefited from higher revenue growth and decent loan demand. However, a rise in expenses and provisions was a significant drag.
First Horizon National Corporation’s (FHN - Free Report) first-quarter 2023 earnings per share (excluding notable items) of 46 cents were in line with the Zacks Consensus Estimate. The figure improved 21% year over year.
FHN's results benefited from higher NII, a fall in expenses and an improving loan balance. However, a decline in deposits, higher provisions and lower non-interest income were the undermining factors.